Economic data pushes US stocks lower -13 Jan 2010

US stocks ended with modest losses on Thursday, 13 January 2011. Stocks started the day in the red right from the start. Economic data dominated the day and the same checked in mixed in nature. The decline was led by commodities today, which slipped despite a weak dollar. Dow ended lower by 23.54 points (0.2%) at 11,731.9. Nasdaq ended lower by 2.04 points (0.02%) at 2,735.29. S&P 500 ended lower by 2.2 points (0.2%) at 1,283.96.

Seven out of ten economic sectors ended lower led by materials, utilities, healthcare and financial sectors. Telecom, industrial, and consumer staples were the sectoral laggards. Pharmaceutical giant Merck fell considerably following the company’s statement on changes to the clinical studies for vorapaxar, an investigational cardiovascular medicine. The fall hurt market sentiment.

The US Labor Department reported that the number of US workers who filed new applications for jobless benefits jumped 35,000 last week to 445,000, the highest level in more than two months. A government official attributed the sharp increase largely to administrative backlogs. Still, the sharp rise in new claims, which had fallen steadily since last summer, is likely to put investors on guard following a disappointing December employment report last week.

The four-week average of new jobless claims rose a much smaller 5,500 to 416,500. The moving average is considered a more accurate measure of employment trends because it evens out fluctuations in the weekly data that can give a distorted picture of the labor market. The number of people who continue to receive unemployment checks, meanwhile, dropped by 248,000 to a seasonally adjusted 3.88 million in the week ended 1 January 2011. The four-week average fell by 72,000 to 4.06 million.

The US Commerce Department reported that the US trade deficit narrowed for a fourth straight month in November 2010. The nation’s trade deficit contracted a slight 0.3% to $38.3 billion from a revised $38.4 billion in October. This marked the smallest trade gap since January. The trade deficit shrank 13.9% in October. Both exports and imports rose in November, but exports expanded at a slightly faster pace.

Separately, U.S. producer prices jumped in December, rising a seasonally adjusted 1.1% in December from November. However, stripping out volatile food and energy items, producer prices increased 0.2%. Economists polled by Dow Jones Newswire were expecting a 0.8% increase in the overall figure. The core index of producer prices came in line with forecasts.

Nymex crude oil prices fell in tandem with US stocks. Somber economic data pushed crude prices lower on demand worries. On Thursday, crude oil futures for light sweet crude for February delivery closed lower by $0.46 (0.5%) at $91.5/barrel. Earlier in the day, prices rose to a high of $92.38.

In the currency market on Thursday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies dropped by 1.1%.

Natural gas settled 12 cents lower at $4.41 per million British thermal units. The Energy Information Administration reported today that natural gas storage declined 138 million cubic feet. Market had expected a decline of 139 to 143 billion cubic feet.

Precious metals ended mixed on Thursday, 13 January 2011 at Comex. Gold prices inched up as the dollar retreated considerably, but silver prices ended lower. Prices stayed weak earlier in the day as most of the pressure in the European region regarding concerns over sovereign debt problems eased. Gold for February delivery rose by $1.2 (0.1%) ending at $1,387 an ounce on the New York Mercantile Exchange. Prices fell to a low of $1,377.1 and rose to a high of $1,392.1 during intra day trading. March Comex silver futures ended lower by 28 cents (1%) at $29.26.

Italy and Spain held the most recent auctions in a strong of successful sovereign debt offerings from the eurozone.

After the bell, Intel reported a 48% jump in fourth-quarter profit on demand for server processors. Indian ADRs ended mostly lower on Thursday. Infosys and Wipro Technologies were the main losers shedding 6.3% and 3% respectively. For 14 Jan 2011, the industrial production and Consumer prices index data are the main reports expected. Other than that, JP Morgan Chase will report earnings.

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